The Importance Of Customer Satisfaction And Loyalty Research

the importance of customer satisfaction and loyalty researchlistening carefully to the voice to the consumer

customer satisfaction and loyalty researchWhy is customer satisfaction andloyalty research so important?One word: Revenue.The Importance of Customer Satisfaction and Loyalty ResearchWhy is customer satisfaction and loyalty research so important? One word: Revenue. Satisfiedcustomers spend more money, refer more customers and patronize businesses longer thanunsatisfied customers. This all leads to more revenue for businesses that can keep their customerssatisfied. Therefore, companies striving to maximize revenue must seriously consider investing in acustomer satisfaction and loyalty research program.Customer satisfaction and loyalty research is so powerful primarily because it enables companies tocommunicate directly with customers about their needs - assuring that the quality standards youestablish reflect the “voice of the customer” - and not just the company line. This type of researchcan help you:ssrs research. refined. Learn about your strengths and weaknesses Determine strengths and weaknesses relative to competitors Allocate resources for optimal impact and satisfaction Indicate your seriousness about improving the quality of products and services to both youremployees and your customers Gain additional insight into the sources of dissatisfaction and areas requiring improvement Provide a system for informing management of problems or situations requiringimmediate attention1

customer satisfaction and loyalty researchThe Customer Satisfaction Measurement ProcessEvery company is different, so a “one size fits all” approach rarely is very effective - a specificapproach is usually required to meet the needs of individual companies. However, the overallprocess can be divided into six interactive phases.The Customer Satisfaction Measurement Processssrs research. refined.A well-designed customer satisfaction approach can eliminate much of the guesswork regardinghow customer satisfaction directly impacts business outcomes. It can provide direct estimates ofthe bottom line improvements you’ll achieve from specific increases in satisfaction levels.A Customer Satisfaction program helps you determine: Key drivers of satisfaction Items that make the greatest contribution to the driver Overall satisfaction level’s effect on business outcomesStrategic analysis identifies critical areas for improvement: High priority Potential resources for reallocation Leverage opportunities Low priority2

customer satisfaction and loyalty researchIdentifying specific levels of performance helps you set targets and establish key indicators allowingyou to more effectively: Allocate resources Focus on objectives congruent with customers’ expectationsThe Best Way to Determine What Is Important to Your CustomersThere is no single best way to assess the relative importance of specific aspects of performanceand that the choice of a method depends on your particular needs. There are, however, severalapproaches: Multiple Paired Comparisons – This technique avoids the problem of little differentiationamong attributes and allows customers to make trade-offs regarding the importance ofspecific attributes the same way they would evaluate products or services in the real world. Constant Sum – In this method, customers are asked to apportion some number ofpoints, generally 10 to 100, that reflect their relative importance in determining overallsatisfaction. Competitive Leverage Map – This map integrates both importance and performanceinformation to identify areas of competitive strength and weakness. Regression Analysis – This is a useful method for assessing the relative importance ofattributes when customers are unable or unwilling to directly state their views. It examinesthe extent to which customer satisfaction or performance ratings for specific attributesare related to customers’ overall satisfaction levels. Key Driver Analysis – This method quantifies the relationship between 1) the key driversand satisfaction and 2) satisfaction and a business outcome. This analysis suggests whereto allocate resources to get the best return on investments.ssrs research. refined. Structural Equation Modeling – This is a sophisticated structural model developmentprocess that takes into account - and quantifies - the interplay of attributes on one anotherin driving or influencing the satisfaction of customers.Transitioning Customers from Satisfaction to LoyaltyThere is a complex relationship between satisfaction and loyalty. Satisfaction is the first tier in therelationship between a customer and the company. In order for a company to differentiate itselffrom the competition, it will have to move customers from the first tier of this relationship, satisfaction,to the second tier, loyalty.3

customer satisfaction and loyalty researchCompanies can derive direct estimates of the bottom line improvements they’ll achieve from specificincreases in satisfaction levels through a loyalty model that incorporates two different techniques:Factor Analysis and PLS (Partial Least Squares) regression.ssrs research. refined.To develop this model for your company, SSRS would develop questions about the importance ofcertain attributes surrounding your service. These attributes would be thought of as encompassingall of the dimensions of your product and service that can be rated – the “Key Drivers” of overallcustomer satisfaction. Your customers would rate the importance of these attributes, and SSRSwould use the results to perform a factor analysis. The results of the factor analysis give us aconceptual foundation for the customer satisfaction model. (This step may not be necessary if aconceptual foundation already exists.) Then, the results of the factor analysis are submitted to aPartial Least Squares (PLS) analysis or regression. Unlike some other models (LISTREL,Confirmatory Factor Analysis) this model produces direct numerical values for performance andsatisfaction.4

customer satisfaction and loyalty researchThis Customer Satisfaction methodology addresses the following types of questions: What are the key drivers of satisfaction? Which items make the greatest contribution to the driver? Where should I invest my money? What is the overall level of satisfaction? How does overall satisfaction affect business outcomes?ssrs research. refined.In addition, this type of customer satisfaction analysis can be performed for your company vs.your competitors. This enables you to see how you are performing on these same key drivers ofsatisfaction in comparison to your competitors.5

customer satisfaction and loyalty researchAbout the Author:Tim PokalskyTim Pokalsky is an SSRS Account Executive whose constant curiosity drives him to take onclient research initiatives as his own. He consults clients in the utility, telecom and home/homeimprovement industries – among others. Every year, Tim oversees tens of thousands of interviewsfor his clients, helping them turn data results into actionable plans.In his more than 15 years of market research experience, Tim has had extensive experienceconducting large-scale projects for Fortune 100 clients. In his current position, Tim focuses onproblem definition, study design, analysis, reporting and the presentation of study results.Over the past decade Tim’s research has been cited in academic journals, business magazinesand on TV. He presented “Telephone and Internet Survey Methodologies – Current and FutureApproaches” at the Home Improvement Research Institute’s Spring 2010 Conference.ssrs research. refined.You can reach Tim at tpokalsky@ssrs.com6

customer satisfaction and loyalty research program. Customer satisfaction and loyalty research is so powerful primarily because it enables companies to communicate directly with customers about their needs - assuring that the quality standards you establish reflect the "voice of the customer" - and not just the company line. This type of .